The State of Vermont may not shut down a federally-approved nuclear power plant, the federal appeals court for the Second Circuit in New York ruled last week. Vermont has sought to prevent the Vermont Yankee reactor, whose original 40-year license expired in March 2012, from being re-licensed, but the court ruled that federal regulation of nuclear power safety preempts state authority over safety completely. The Nuclear Regulatory Commission has already re-licensed the plant for another 20 years.

The wrinkle in the case, Entergy v. Shumlin, is that neither of the two laws struck down by the Court—known as Act 74 and Act 160—attempted to regulate safety. Passed in 2003 in response to Entergy’s request to expand its on-site waste storage facilities, Act 74 allowed the expansion, but barred the storage of waste generated after the plant’s license expiration in March 2012 without state legislative approval.

Act 160, which became law in 2006, states that “a nuclear energy generating plant may be operated in Vermont only with the explicit approval of the General Assembly.” It further provides that in deciding whether to allow a nuclear plant, the legislature is to consider “the state’s need for power, the economics and environmental impacts of long-term storage of nuclear waste, and choice of power sources among various alternatives.” The courts have long ruled that although states may not regulate nuclear power plant safety, it is up to the states to decide whether nuclear power is needed or economical.

Nevertheless, the appeals court unanimously held that despite the stated reasons for the two laws, statements made by legislators while the bills were on the floor indicated that their real purpose was to kill the Vermont Yankee reactor because of safety concerns.

“The nuclear power industry has just been delivered a tremendous victory against the attempt by any state to shut down federally regulated nuclear power plants,” crowed Kathleen Sullivan, a lawyer for Entergy, which owns Vermont Yankee.

In the only legally arguable portion of the opinion, however, the court also held that Vermont may not close the reactor for being too expensive because it operates in a competitive market for electricity, implying that the state may not pursue policies based on alternative economic theories.

Vermont Gov. Peter Shumlin (D) reiterated his opposition to the plant, saying it is “not in the best interest of Vermont,” and suggesting the fight was not over: “While I disagree with the result the 2nd Circuit reached in preempting Vermont's Legislature, the process does not end today.”

The appeals court also struck down a lower court ruling that could have allowed Entergy to force Vermont to pay its legal bills.